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Resources

The Disruptive Innovation Litmus Test

The following is an extract from Clayton Christensen's The Innovator's Dilemma and is a handy tool used to assess the merits of an idea and its ability to add significant value to an organisation by way of exploiting disruptive innovations in a high growth market. 

New Market Disruption• Is there a large population of people who historically have not had the money, equipment, or skill to do this thing for themselves, and as a result have gone without it altogether or have needed to pay someone with more expertise to do it for them?• To use the product or service, do customers need to go to an inconvenient, centralized location?

Low-End Disruption 

• Are there customers at the low-end of the market who would be happy to purchase a product with less (but good enough) performance if they could get it at a lower price; and• Can we create a business model that enables to earn attractive profits at the discount prices required to win the business of the overserved customers at the low end?

Once an innovation passes the new market or low-end disruption test, there is still a third critical question to answer affirmatively:

• Is the innovation disruptive to all of the significant incumbent firms in the industry? If it appears to be sustaining to one or more significant players in the industry, then the odds will be stacked in that firm’s favor, and the entrant is unlikely to win.

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